Jane Street Storm: The Institutional Game Behind BTC

In the trading landscape of Wall Street, Jane Street has always been a low-key yet incredibly massive presence.

Data speaks volumes about their profitability: in the first 9 months of 2025 alone, the firm generated a staggering $24 billion in net trading revenue, shattering Wall Street's quarterly historical records.

However, this globally dominant trading firm has recently been swept into complex legal and regulatory whirlpools in both Asia and North America. The aftershocks of this storm seem to be subtly influencing Bitcoin's price action.

📉 The "Ten-Minute" Mystery of the Terra Collapse

This week, the long-dormant Terra (LUNA) saga has resurfaced. The bankruptcy trustee for Terraform Labs has formally sued Jane Street in Manhattan federal court, with the core dispute centering on whether the firm used insider information to exit the market ahead of the crash.

The timeline disclosed in the lawsuit is extremely tight:

• May 7, 2022: Terraform Labs withdrew $150 million in UST from the decentralized liquidity pool Curve3pool without public notice.

• Just 10 minutes later: A wallet associated with Jane Street withdrew $85 million from the same pool.

The plaintiff alleges that a former Terraform intern (who later joined Jane Street) acted as an internal liaison, passing on non-public information regarding liquidity operations. The bankruptcy trustee even stated bluntly that this withdrawal was one of the catalysts that triggered the UST de-peg and the subsequent $400 billion crypto market collapse.

In response, Jane Street has strongly denied these allegations, calling them "baseless."

🌐 Regulatory Hammer in the Indian Market

This is not the only compliance challenge the firm has faced recently. As early as July 2025, the Securities and Exchange Board of India (SEBI) launched a major investigation into its derivatives trading.

The SEBI investigation report revealed a highly regular trading pattern (occurring between 2023 and 2025):

1. Morning Pump: Massive buying of Bank Nifty index constituents and futures to push the index up.

2. Option Positioning: Simultaneously building massive short option positions (Delta equivalent size reaching 7.3 times the stock position).

3. Midday Reversal: Selling off the morning holdings, causing the index to fall, and taking profits on the options side.

SEBI determined that this behavior constituted suspected manipulation of settlement prices to illegally profit approximately $580 million, and issued a market ban.

Jane Street subsequently deposited funds into a third-party escrow account and filed an appeal; the case is still pending.

⏱️ Bitcoin Market's "10 AM Dump" and Structural Shifts

Turning back to the crypto market, since late 2025, Bitcoin traders have observed a strange phenomenon: the "10 AM Dump."

Whenever it is 10:00 AM ET (shortly after the US stock market opens), spot BTC and related ETFs often face intensive selling pressure. For example, during several trading days in December 2025, BTC frequently plummeted thousands of dollars within minutes, stabilizing only after liquidating a large number of leveraged longs.

The market's gaze naturally fell upon the Authorized Participants (APs) of the ETFs.

As one of the four core APs for the world's largest spot Bitcoin ETF (BlackRock's IBIT), Jane Street controls the underlying channels for ETF share creation and redemption. In the third quarter of 2025, the value of IBIT shares it held was approximately $5.7 billion.

However, 13F filings revealed a more intriguing asset allocation logic: during the same period (Q4 2025) when the spot market was enduring morning selling pressure, the institution significantly increased its holdings in MSTR (MicroStrategy)—a stock with "Bitcoin leverage proxy" attributes—by a staggering 473%. This potential strategy of "pressuring spot while bottom-fishing via leveraged proxies" has sparked widespread speculation in the community.

🔄 Coincidence or Causality? Breaking the Pattern in February 2026

A dramatic turn of events occurred after the Terraform lawsuit was widely reported.

The "10 AM Dump" phenomenon, which had long plagued the US market opening hours, seemed to suddenly disappear. On February 25, 2026, Bitcoin ignored early morning resistance and strongly broke through the $68,000 mark. Daily ETF net inflows hit a new high for February, and over $300 million in shorts were liquidated.

From an objective financial analysis perspective, correlation does not equal causation. BTC's rebound was also driven by macro sentiment, extremely oversold technical indicators (RSI hitting freezing point), and short covering. However, it is undeniable that under the dual focus of legal risks and multi-national regulatory scrutiny, it is logically sound for large market makers to adjust or pause certain high-frequency algorithmic models.

Conclusion: The Clash Between TradFi Logic and Satoshi's Vision

Looking at the history of the precious metals market, financial giants with advantages in underlying channels (such as certain large investment banks that have faced massive CFTC fines) are often able to establish structural advantages in the market.

The approval of spot ETFs brought tens of billions of dollars in institutional incremental funds to the crypto market, but it also introduced the "trusted intermediary" nodes deeply rooted in the traditional financial system. When the algorithmic logic of market makers collides with the native sentiment of the crypto market, friction is inevitable.

This market reversal might just be the market voting with its price—Bitcoin's underlying design intent was, after all, to achieve the free flow of value in an environment that does not overly rely on centralized channels.

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